Plugged In

Is the video game industry Apple’s next victim?

While Apple has a well-earned reputation as the inventor of new markets, it's also something of a serial killer.

The company's advances in digital music players made the Walkman an afterthought. The introduction of iTunes sounded a virtual death knell for many record retailers. The iPad cut the legs out from under the once fast-growing netbook PC market. And the iPhone has put Motorola in a fight for its life.

Now, the company looks to be focusing on the video game industry -- and plenty of people are rightfully scared.

The sheer numbers are overwhelming. In 2011 alone, the company says it sold 172 million "post PC" devices, an Apple term encompassing the iPhone, iPad and iPod. To put that into context, that's nearly 30 million more than the lifetime sales of the Xbox 360, PlayStation 3, Nintendo 3DS and PlayStation Vita added together.

And it's worth noting that for the last two years, Apple has chosen to unveil the latest iPad smack in the middle of the video game industry's Game Developer Conference, effectively sucking the oxygen out of the news cycle. Adding insult to injury, they've made that announcement right across the street from the GDC's main convention hall.

Last year, Nintendo's global president Satoru Iwata spoke passionately about the danger Apple (and other mobile companies) represent to the industry.

"Game development is drowning," he said. "Until now, there has always been the ability to make a living [making games]. Will that still be the case moving forward?"

Ben Cousins, the general manager of mobile game maker ngmoco Sweden, furthered that argument at this year's GDC.

"I believe that mobile devices and mobile platforms are the disruptive technologies that are going to cut a slice through the Western market," he said in a talk called "When The Consoles Die, What Comes Next?"

To say Apple could outright kill the video game industry is a bit hyperbolic. A diminished market is not a dead one, and there will likely always be a demand for bleeding-edge products which can't be played on an Apple device.

"There's always going to be a market for the very high end, whatever that high end is," says Ubisoft Toronto managing director Jade Raymond. "If consoles eventually become the holodeck — and I can only have that at home, I'm going to want that. It's going to be something you can't get walking to the bus. … That high-end experience needs to be beefed up with our top hardware — but more and more we're going to have to think about what people's experiences are."

There is, however, no doubt that Apple's having a transformative effect.

Sony has seen the Vita struggle a bit since its February debut, and Nintendo was forced to deeply cut the retail price of the 3DS when it failed to quickly stir gamer passions. All the while, gaming apps have continued to see sales increase, even finding success by crossing over to console. One of the most successful games on Xbox Live Arcade — Fruit Ninja — got its start as an app. And it's virtually mandatory for publishers to release an app companion to major console games these days to capitalize on both markets.

Cousins says he expects this trend to continue, and suggests that some franchises may abandon consoles for the App store.

He notes that after televisions were introduced in the mid-1960s, cinema attendance plunged and theaters suffered terribly. Content producers, though, managed the transition by bringing movies to TV (and later home video).

"They moved their content to the lower-res, free-to-play TV channels," he says. "Games content developers need to do the same. They need to move their content to these low-resolution platforms."

The company stumbled into its powerful position in the gaming world and didn't seem to embrace it until the fall of 2009, when Steve Jobs, in one of his famous keynotes, referred to the iPod Touch as "the number one portable game player in the world." A year and a half later, console companies are wringing their hands as talk of an Apple TV swirls and the new Angry Birds is getting more attention than the new Halo.

To some, it's really just a matter of time.

"It is quite easy to imagine a world where an iPad is more powerful than a home console, where it wirelessly talks to your TV and wirelessly talks to your controller and becomes your new console," Mike Capps, president of Epic Games, recently told Reuters. ""Apple is definitely building their devices as if they care a lot about 'triple-A' games."